Are Annual Credit Card Fees Worth It? Here’s How to Tell

Annual credit card fees can cost a decent amount of money, ranging from about $99 on the low end to as much as $600 on the high end. There are plenty of great no-fee credit cards in Canada, but depending on what you’re spending your money on, a credit card with an annual fee can be worth it for the rewards and perks. So which makes sense for you?
When an annual credit card fee is worth it
The higher the annual fee, the higher the eligibility requirements. Before you start browsing credit cards with annual fees, it’s important to make sure you qualify. If you do, these cards can be worthwhile in certain scenarios.
1. You’ll spend enough to earn the welcome bonus
Credit cards with annual fees typically come with generous welcome bonuses of additional points when you make your first purchase with the card or spend a certain amount on the card within the first few months of opening your account. Take a look at your expenses and make sure you’re able to hit the spending threshold to get the bonus before committing.
2. You’ll capitalize on higher-end perks
You get what you pay for. The annual fee on a credit card directly translates to the types of perks and benefits you can get with the card. If you travel frequently and will take advantage of baggage fee savings, airport lounge access, companion passes, travel insurance, and other perks that come with a travel credit card, the annual fee is often worth it.
3. Your spending will offset the annual fee
If you spend with your credit card often enough, you won’t even feel the dent of the annual fee because you’ll make up for it with the rewards you can earn.
When an annual credit card fee is NOT worth it
Even if you qualify for a credit card with an annual fee, sometimes expensive credit cards don’t earn their keep. Consider what you’re planning to use your card for and how much experience you have with credit cards when selecting a card.
1. You’re a new credit card user
If you’re searching for your first credit card, a no-annual-fee card is the way to go. This will give you a chance to get used to paying your monthly bill on time without the pressure of worrying if you’re getting your money’s worth. Once you get a handle on things, you can consider upgrading.
2. You don’t use your credit card often
Believe it or not, some people do still prefer cash. If you’re more inclined to use cash or even your debit card than a credit card, paying an annual fee probably won’t be worth it. Getting the most out of a credit card with an annual fee generally requires spending a certain amount, which you’re less likely to hit if you aren’t using your card for most of your spending.
Source: iQuanti, Inc.